Is Waco, Texas Good for Airbnb Investment?

Potentially—Waco, Texas combines visitor demand with long-term real estate upside.

• Presents a promising opportunity, largely driven by the city's significant tourism growth, primarily fueled by the popularity of "Fixer Upper" and Magnolia Market.
• Current market conditions indicate a consistent demand for short-term rentals, with tourism trends showing no signs of slowing down.
• Property values in Waco have seen a steady increase, offering good appreciation potential for investors.
• The investment potential is further enhanced by the city's ongoing revitalization efforts and growing number of attractions.

$1,200–$2,800 per month based on location, season, and property quality.

• Based on available market data, Airbnb hosts in Waco, Texas typically earn between $1,200 to $2,800 per month.
• Seasonal variations show peak earnings during spring months coinciding with Baylor University events and Magnolia Market tourism, where monthly revenues can increase by 25-40% above baseline rates.
• Key factors affecting earnings include proximity to Baylor University campus and downtown attractions, property size and amenities, with entire homes outperforming private rooms by approximately 60-80%.
• Properties within a 3-mile radius of Magnolia Market command premium rates averaging $15-25 higher per night than those in outer areas.

Potentially strong—typical annual ROI is 12–18%.

• Typically generate ROI between 12-18% annually, significantly outperforming traditional long-term rentals which average 6-9% in the market.
• The average daily rate for Airbnb properties in Waco ranges from $85-140 depending on property size and location, with occupancy rates averaging 65-75% throughout the year, driven by Baylor University events.
• Payback periods for Airbnb investments typically range from 5.5 to 8 years compared to 11-15 years for conventional rental properties.
• The strong tourism infrastructure, including the Silos district and various festivals, supports consistent demand.

Waco, Texas averages 65–70% annual occupancy, with seasonal variation.

• Airbnb occupancy rates in Waco, Texas typically average around 65-70% annually, with significant seasonal variations that peak during spring months (March-May) at approximately 75-80% due to favorable weather and events like those at Magnolia Market, while summer months see rates around 70-75% driven by family vacations and local festivals.
• Fall occupancy generally maintains steady levels at 65-70%, but winter months drop to the lowest rates of 50-60% as tourism naturally declines.
• Waco's occupancy rates generally perform slightly above the Texas state average of 60-65% and closely match national Airbnb averages of 65-70%.

The strongest opportunities balance visitor demand, nightly rates, and acquisition cost.

• The best Airbnb investment neighborhoods in Waco include Downtown Waco, which offers proximity to Magnolia Market and the Brazos River with strong pricing power due to tourist demand and walkability to restaurants and attractions.
• East Waco provides affordable investment opportunities with ongoing revitalization efforts and close access to Baylor University, attracting both tourists and visiting families.
• The Baylor University area commands premium rates during football season and graduation periods while maintaining steady demand from visiting academics and prospective students year-round.
• Castle Heights offers upscale properties with higher rental rates, appealing to visitors seeking luxury accommodations near the Cameron Park Zoo and historic homes.
• Sanger Heights provides a balance of affordability and charm with Victorian-era homes that attract tourists interested in historic character while remaining accessible to downtown attractions.
• Hewitt, just south of Waco, offers newer construction properties that appeal to families visiting the area's attractions while providing more space and parking.
• The Woodway area attracts higher-income visitors with upscale properties and proximity to country clubs and recreational facilities, though initial investment costs are higher.

Yes, but only where zoning permits short-term rentals and every required license is current.

• In Waco, Texas, short-term rental properties must obtain a Short-Term Rental Permit through the city's Development Services Department, with applications requiring property owner information, proof of insurance.
• The city limits occupancy to two guests per bedroom plus two additional guests, with a maximum of 12 people total regardless of property size.
• Owner-occupancy is not required for short-term rentals, allowing investment properties to operate as STRs.
• Zoning restrictions permit short-term rentals in most residential districts including single-family, duplex, and multi-family zones.
• The registration process involves submitting an online application, paying permit fees of approximately $200 annually.
• Recent regulatory changes implemented around 2020-2021 established stricter noise ordinances with enhanced penalties, required prominent posting of house rules and emergency contact information.

Tax rates vary by jurisdiction; licensing, inspection, and insurance costs are additional.

• Short-term rentals in Waco, Texas are subject to several fees and taxes including the state hotel occupancy tax of 6%, McLennan County hotel occupancy tax of 2%, and City of Waco hotel occupancy tax of 7%.
• Property owners must obtain a short-term rental permit from the City of Waco costing approximately $150-200 annually, along with a business license fee of around $50-75.
• Registration with the Texas Comptroller for tax collection purposes is required but typically free, though operators may need to pay a $20-30 processing fee for the sales tax permit.
• Additional costs may include fire safety inspections at $75-100, health department permits where applicable at $50-75, and potential homeowners association fees or special assessments.
• Properties must also comply with regular property tax assessments, and operators should budget for potential late fees of 5-10% monthly if tax payments are delinquent.